Relaxing whilst doing Competition Law is not an Oxymoron

Ruminations on the Google investigation

with one comment

Over the past few months we have provided you with our views on the investigation undertaken by the European Commission with respect to Google. Here is an account of recent developments, thoughts, concerns, readings, ideas, and possible questions to be posed:

The developments. As you all may well know, the Commission has sent Google a preliminary assessment (a necessary formal step towards a commitment decision under Article 9 of Regulation 1/2003) and has requested Google to provide swiftly proposals of possible commitments that could address the concerns set out on that document. For the Commission’s statement identifying in broad terms the practices it objects to, see here.

In parallel, Google has lodged a complaint against Microsoft and Nokia. Google claims that “Nokia and Microsoft are colluding to raise the costs of mobile devices for consumers, creating patent trolls that side-step promises both companies have made. They should be held accountable, and we hope our complaint spurs others to look into these practices“. We have no additional information on this complaint and therefore do not have any opinion on whether it may be well-founded or not, but we regard it as something potentially interesting given that, until now, patent trolls had managed to stay more or less away from the antitrust spotlight in this bout of “patent wars” (note the IPCom settlement).

(By the way, the European Commission has excellent staff working on the unit dealing with cases related to IT, Internet and Consumer Electronics, but they must be incredibly swamped with so many complaints piling up on their desks).

The substantive concerns. We’ve already been quite vocal about our substantive concerns with regard to this case (note the caveat that we speak about matters of principle and on the basis of almost no case-specific information), so we won’t insist on them today.

The policy concern. We fully understand the policy rationale for changing the tone and attempting to address competition concerns in high-tech innovative markets swiftly and on the basis of “negotiated” solutions. However, the increasingly frequent recourse to such solutions also gives rise to several concerns. One of them is that commitment decisions do not contain a final position on the existence or non-existence of an infringement. If such decisions become the standard way of dealing difficult with cases –which would then be left substantively unresolved-, this would imply blurring the contours of the law. Laws should be clear. How can we expect the law on Article 102 to be clear when 14 out of the past 17 abuse of dominance cases were put to an end by virtue of brief and unconclusive commitment decisions? How does one strike the right balance between setting the law straight and addressing competitive concerns rapidly and effectively?

The doubt. (this one is not our’s but Pablo Ibañez’s): does publicly requesting a company to offer commitments fit with the letter and spirit of Article 9 of Regulation 1/2003?

The idea. We feel a bit frustrated by the fact that we’ve spent months thinking about this investigation having no information other than news clips and press releases. We’d love to see how the Commission has framed its concerns regarding Google under current competition law standards. We do not rule out the possibility that we may have been wrong all along, and maybe (although I have my doubts) having a look at the Commission’s preliminary assessment would convince us. How about requesting access to the non-confidential versions of the key documents in the file pursuant to Regulation 1049 as soon as the investigation is over? It could be an interesting exercise…

The questions. A few months ago, as I was trying to contribute to a business venture (now risking to sink together with a significant portion of my savings) I read part of a book called “What would Google do?” written by Jeff Jarvis, the editor of The book built on Google’s history and strategy and explained, in the light thereof, what Google would do if it were in other company’s shoes. Let’s invert the question:

Imagine you were Google and you receive a letter from DG Comp inviting you to offer a solution to their concerns or else be subject to a procedure which will most likely lead to a fine. What would you do if you were Google?

That’s a tough one because “negotiating” an Article 102 case is like playing against someone with loaded dices. Consider these factors: 1) once DG Comp views solidify, modifying them becomes practically impossible; 2) the proportionality of any eventual remedy would escape any meaningful judicial review following Alrosa; and 3) in case that a final decision declaring the existence of an infringement was adopted, stats say that the Commission would most likely prevail in Court should Google appeal.

And what would you do if you were the Commission?  The Commission has most likely a winning hand but it also has tough choices to make and certainly does not want to be perceived neither as a softie nor as a bully. Should it adopt a decision declaring that there is no infringement (which in my incomplete view would appear as the most sensible solution) it would surely be dragged on to legal proceedings before the EU Courts that would take years by disgruntled complainants. But should it adopt an Article 7 decioson imposing sanctions on Google it would probably have a hard time in drafting a solid decision, and it would also be dragged on to lengthy court proceedings by Google. My take: perhaps it would be rational to ask very little from Google (i.e. not requiring them to alter a business model that has unquestionably enhanced consumer welfare), enough to sell it as a commitment decision that can have an easier life before the Court, and to move on to the other more pressing competition issues affecting innovation markets.

The reads. Prof. Sokol arranged a most interesting blog symposium on Competition and Online Search. We recommend that you take a look at some of the posts published there. You only need to click here.

My own case against Google. When someone types Chilling Competition in the search box the suggested search terms show “Chilling Competition Nicolas Petit” but not “Chilling Competition Alfonso Lamadrid”. I’m hurt. As if having Nico’s picture appear in the address bar wasn’t enough…

Written by Alfonso Lamadrid

5 June 2012 at 9:36 pm

One Response

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  1. If I were Google, I would play for time. In any high-innovation market, the competition authorities have to act quickly or risk being irrelevant. Google already has every incentive to diversify its business model, and the more it does so, the less it cares about the Commission’s decision. All it needs is time.

    Martin Holterman

    5 June 2012 at 9:50 pm

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